1. CC: The World
Rather than waste the taxpayers' money on prosecuting Ralph Cioffi and Matthew Tannin, let's just sentence them to careers as prominent commentators in the media and be done with it.
The two former hedge fund managers at Bear Stearns were charged Thursday with securities fraud related to their roles in the funds' collapse a year ago.
Unlike Jimmy Cayne, who was CEO of Bear at the time, Cioffi and Tannin weren't busy hitting the national bridge circuit last year. They were at work, exchanging incriminating emails about the garbage they were peddling to customers of the venerable Wall Street firm.
According to the government's indictment of the two fund managers, Cioffi sent an email to a colleague in March that read: "I'm fearful of these markets.
Tannin said it's either a meltdown or the greatest buying opportunity ever. I'm leaning more towards the former."
A week earlier, Cioffi told a Bear broker that had more than 40 of his clients invested in the fund that "we have an awesome opportunity."
That same day, Tannin wrote to the same broker: "I don't know where you are putting your money now but I would suggest we speak about adding more to the fund. That's what I'm thinking."
He then mused to a colleague: "Believe it or not I've been able to convince people to add more money."
Such exchanges are reminiscent of those made by Henry Blodget, the Internet stock analyst at Merrill Lynch that trashed stocks in private over email while simultaneously recommending them as good investments to clients at the height of the dot-com bubble.
Blodget, who settled with the authorities without admitting any wrongdoing, is now flourishing as a well-known commentator on the financial markets. Perhaps there's a future here for Cioffi and Tannin.
Consider an email from Cioffi to Tannin in early March 2007 in which he offered an analysis of their situation: "
we have our health and families...
w e are not a 19 year old Marine in Iraq."
His ratings will be through the roof.
Dumb-o-meter score: 95. The next people they will have to convince are the jury.
2. FedEx and Its (Nearly) Billion-Dollar Blunder
, a bastion of corporate consistency when it comes to earning, reported its first quarterly crater in 11 years on Wednesday. The cargo shipping behemoth reported a net loss in its fourth quarter of $241 million, or 78 cents a share.
FedEx, of course, is in good company. Virtually every firm on the planet is ailing from the sting of high fuel prices, including
United Parcel Service
, United Airlines parent
Delta Air Lines
, just to name a few of the wounded.
Frederick Smith, FedEx's chairman, put on a good face in announcing the setback, justly pointing the finger at high fuel costs and the anemic U.S. economy. Unfortunately, when FedEx finally decides to join the club of the corporate misbegotten, it goes all out. The company said in its release that 2009 is going to be challenging and that it will offset these woes by reducing operating costs.
While Smith may be noble -- it is refreshing for a CEO to state his company's case bluntly -- he could have made mention of another little item that affected FedEx in the fourth quarter. As it turns out, FedEx took a one-time charge of $891 million to erase the name FedEx Kinko's in favor of FedEx Office.
The corporate makeover, and the price attached, is far from chump change. Barring that little ticket item, FedEx would once again have had some quarterly earnings to report. Instead, economists are fretting that FedEx is a barometer of broader ailments in the economy.
A quick memo to CEO Smith: When oil prices rise, put an ixnay on a name change.
Dumb-o-meter score: 91. That $891 million can buy a lot of gas -- even at $4 a gallon.
3. Sour BlackBerrys at ABC
Aren't BlackBerrys supposed to make balancing life and work easier?
Apparently not at ABC TV Networks, a business unit of
. A tiff broke out a few weeks ago after the company's brass balked at paying news managers and producers overtime for work done via their Blackberrys.
The machines, which are made by Canada's
Research In Motion
, allow people to stay looped into their company-run email systems while away from their offices by sending and receiving memos.
ABC's managers were quite happy with the electronic-leash end of the deal -- keeping a rein on their workers day and night -- but weren't so thrilled to pay extra compensation for
work done of the devices, according to a report in the
New York Post
Naturally, the network's reporters and managers were less than thrilled with this news flash. Don't their bosses know that you can't shoot footage and be on the scene if you're parked at your desk?
This spat became so heated that at one point some workers had their beloved but ABC TV-owned and paid-for devices taken back by the company in anger, according to
Happily, cooler heads prevailed, a deal was struck and folks got their BlackBerrys back.
Talking to the
, Sherry Goldman, spokeswoman for the Writers Guild of America East said: "We were not looking for these people to be compensated for all of their time on BlackBerrys, such as when they check e-mails at night."
But she also said the union was not prepared to sign an agreement that all work conducted by BlackBerry would be unpaid.
The new deal?
Non-routine work will now be paid. Now that's what we call news.
Dumb-o-meter score: 88. Sounds like ABC bigwigs wanted the "you scratch my back and I'll scratch my back" deal.
Lehman's Fuld Sorry, but Not as Much as Everybody Else
CEO Richard Fuld repented for his brokerage's recent subprime-related snafus. As for paying penance, Fuld chose to delegate that task to two of his underlings.
Last Thursday, Lehman Chief Financial Officer Erin Callan and Chief Operating Officer Joseph Gregory
fell on their swords several days after the company forecast a staggering $2.8 billion second-quarter loss, Lehman's first as a public firm.
Not surprisingly, the prediction was true when Lehman reported its results on Monday and Fuld stepped out from the shadows to answer for the firm's bumbling on a conference call.
"I am very disappointed with these financial results," said Fuld. "For me, all I can say is this is totally unacceptable."
The results are even less acceptable to Callan and Gregory, who have actually had to face the consequences of Lehman's recent bumbling. Callan had been one of Wall Street's most prominent women. After a public drubbing by Greenlight Capital's David Einhorn and her demotion to a senior position in Lehman's investment banking division, Callan's certainly not grinning about the firm's second quarter or balance sheet.
Lehman was less immediately forthcoming about Gregory's future, but it hardly matters what he does now, as the recent headlines trumpeting his ouster have surely left a mark.
Though Fuld's minions have been punished for the Lehman fiasco, the firm's investors may be feeling the most pain. Operative Plasterers and Cement Masons International Association 262 Annuity Fund, a shareholder that filed a class-action suit against the brokerage on Thursday, is certainly a little grumpy. The suit sets Fuld, as well as Gregory, squarely in its sights and claims Lehman lost shareholders tens of billions of dollars.
Despite Fuld's sacrificial-lamb switcheroo, the Plasterers still think it wise to hold a company's chief executive responsible for managerial foibles. Next time around, shareholders may say that it is Fuld who is unacceptable.
Dumb-o-meter score: 82. Being Richard Fuld means sort of having to say you're sorry.
5. Big Business' 'Donations' to Sharpton
You'd think that a CEO of a major U.S. corporation would have enough foresight to avoid making a charitable donation that could come back and bite him on his company tuckus.
Well, think again. In fact, not only did one CEO make that misstep but several others joined right in with him. And if that's not embarrassing enough, Al Sharpton, the man-about-cable commentator, may be having a good laugh at their expense.
For years some of the most prestigious corporations in America have been paying big bucks to Sharpton's National Action Network on fear that if they didn't pay up, they could be subjected to a boycott by the African American community, according to an
New York Post
, a newspaper owned by Rupert Murdoch's
The "honor roll" includes Dow component companies
Johnson & Johnson
, all of which made donations to Sharpton's National Action Network,
Other notable companies on the list include heavyweights
But if shelling out money to Sharpton's group in response to what one observer calls "a shakedown operation" wasn't bad enough, it just got worse.
It turns out that the IRS has been investigating the financial affairs of the National Action Network and Sharpton as far back as 2004, and on Thursday the
reported that the government is now sending out a slew of
to the corporate "donors."
But Peter Flaherty, president of the Virginia-based National Legal and Policy Center, says the CEOs and their respective companies could all have dodged this bullet.
"I warned Anheuser-Busch at their annual meeting," he said to
Flaherty also chipped in this gem at Pepsi's annual meeting In 2007: "It's time to end PepsiCo's sponsorship of this demagogue Al Sharpton before it blows up in the Company's face."
So much for foresight.
Dumb-o-meter score: 73. Seems corporate chieftains forgot the adage, "No good deed goes unpunished."
This article was written by a staff member of TheStreet.com.